Property values have fallen 1.1% since March and are continuing to gradually fall because of a lack of buyers, a surplus of listings and a lack of finance, Quotable Value said in its report for August.

Values across New Zealand were now 5.0% below their peak levels of late 2007, but are still 3.1% above their levels from a year ago because of a bounce in late 2009 and early 2010.

The government owned valuer is the first to release a national report on housing values for August. See the full report here and the full spreadsheet here.

Auckland's largest real estate agency Barfoot and Thompson reported last week that house prices fell in August and volumes fell. See more on Barfoot's report here. The Real Estate Institute of New Zealand's report for August is due next week.

"The market sentiment remains cautious with little sign of urgency amongst buyers," QV Valuation Manager Glenda Whitehead said in the report, available in full here.

"There is still a considerable backlog of unsold property on the market, although the number of new properties being added to this pool appears to have slowed as potential vendors choose to wait until the market begins to show signs of recovery," Whitehead said.

"Those with properties currently on the market now accept that they will take longer to sell, although they are not dramatically dropping their asking prices," she said.

Sales volumes remained at relatively low levels below last year and long term averages.

“Some potential buyers are continuing to struggle to secure funding from banks or finance companies who remain cautious about lending for property” said Whitehead.

“The continued lack of buyer urgency, the low number of sales, and the high number of unsold properties means that prices continue to gently slide backwards in most areas," she said.

'Signs of recovery?'

"There are early signs of a slight increase in activity as more people are assessing the market and considering their options. The housing market is usually more active in spring although the current economic climate suggests any upsurge this year will be modest. Short of any fundamental change in the market, values are expected to continue to slide slightly."

Whitehead said the Christchurch earthquake would have a major impact on the housing market in that area, but it was too early to know the full extent.

While values have declined according to the QV index, the average sales price increased slightly from $407,191 to $409,700.

"This increase in average price is due to relatively fewer sales of lower value properties over recent months. The QV index is a more reliable measure of value change as it is not based on average sales prices and is not affected by which parts of the market are more or less active," QV said.

"All the main centres are showing a similar pattern over the last year with values increasing through until March then easing since. Apart from Hamilton and Tauranga, values in the main centres are still above the same time last year, although the gap is rapidly closing. Values in the Auckland Region have been flat over recent months, but as values were increasing rapidly this time last year, the year-on-year gap has closed further to 5.9 percent from the 6.9 percent reported last month," it said.

"Values in the Wellington region have dropped in recent months and are now only 2.0 percent above last year, down from the 3.2 percent reported last month. Values in Christchurch values are 3.2 percent above last year, and in Dunedin 2.7 percent. Values in Hamilton (-1.5 percent) and Tauranga (-0.9 percent) are now both below the same time last year. Unlike the other main centres, these two cities didn’t show a significant increase in values during 2009, instead staying relatively flat."

Declining values in recent months have therefore pushed values lower than they were the same time last year, it said.

Values in most of the provincial centres remain above the same time last year, although the gap continues to close. Napier (3.2 percent), New Plymouth (3.3), Wanganui (4.2%), Nelson (2.6) and Invercargill (3.0) all remain above last year. Rotorua (1.0 percent), Gisborne (0.3 percent), Hastings (1.3 percent) and Palmerston North (1.6 percent) now have values similar to last year.

Declining values in recent months mean that values in Whangarei are now 2.8 percent below the same time last year, and Queenstown Lakes values are 1.5 percent below the same time last year.

See the full regional details from QV's report below.

Auckland

QV’s Residential Price Index for August shows that property values in the Auckland region are just beginning to stabilise, although have dropped by 0.7% since March this year. In contrast, values increased by 6.7% in the 7 months to March. Consequently, values now sit 5.9% above the same time last year, but 2.4% below the market peak of late 2007.

Glenda Whitehead of QV Valuations said; “Values in the Auckland region’s residential market now appear to levelling, although it is too soon to tell whether this is the end of the downward trend which has persevered since March”.

“August activity remained light and caution prevails, but we are seeing early signs that home owners are gearing up to make decisions. We suspect many are assessing their options and actively seeking information, as we have noticed a recent in increase in Market Valuation reports by QV’s registered valuers”

Ms. Whitehead said. “Some home owners are taking advantage of readily available builders, planning extensions and alterations to their existing homes. While this data is not fed into the QV index, it is a sign that home owners view the property market positively enough to believe the cost of renovations will be recouped in the future. Cost and added-value differ, but those we speak to are making long-term decisions whilst enjoying a higher quality home in the short-term. This activity is obviously only being undertaken by those in secure employment and with good levels of equity in their homes” Ms. Whitehead said.

“The North Shore market remains patchy, with no push from buyers. The time taken to sell a property remains extended, with agents reporting low activity levels. However, we believe pre-approvals and requests for refinance are on the rise, a possible signal of a pending bounce in the spring market” Ms. Whitehead said.

“Auckland City is characterised by general lack of confidence. Higher quality properties are still faring reasonably well and some good prices are still being achieved when the right buyer finds the right property. Buyers appear more demanding of quality, and are overlooking properties that have any negatives” Ms. Whitehead said.

“Activity in West Auckland remains subdued and buyers remain cautious, as in other parts of the region. Many home owners are refinancing their existing situation. Of the homes that are selling, those that are upgraded and well located tend to be the ones that find a buyer” Ms. Whitehead said.

“Activity in the South and South East market also remains subdued. Values do however appear to be relatively steady with fewer listings and fewer sales. The lower end of the market, sub $300,000, now appears to have become more attractive to investors, reflecting improved yields. But again, buyers remain cautious. Anecdotally, activity in the $400-600k bracket seems limited.

Uncertain economic conditions continue to dampen confidence” Ms. Whitehead said. QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for the Auckland region in July was $535,918.

Hamilton

QV’s Residential Price Index for August shows that property values in Hamilton are slowly easing.

Unlike most other major centres, Hamilton did not experience significant value recovery from mid to late 2009. Subsequently, values are now 1.5% below the same time last year, and 10.4% below the market peak of 2007.

Mr. Richard Allen of QV Valuations said; “For the second consecutive month, all parts of the city experienced declines in residential property values. However, the average sale price for the city actually increased slightly from $352,576 in July to $356,016, which is a reflection of sales composition, rather than a value increase. Traditionally, the onset of spring and early summer results in a lift confidence and mood with an associated surge in sales activity and volume. However, this year it is hard to see where the stimulus is going to come from. It appears that uncertainty in the economic recovery is going to continue to stifle the residential market in Hamilton for some time to come”.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets.

Tauranga

QV’s Residential Price Index for August shows that property values in Tauranga are beginning to ease. Unlike most other major centres, Tauranga did not see significant value gains in 2009.

Subsequently, values are now 0.9% below the same time last year, and 11.3% below the market peak of late 2007.

Mr. Shayne Donovan-Grammer of QV Valuations said; “The Tauranga property market is currently experiencing a difficult period. Confidence in the market is lacking and there is no expectation of a short to medium term improvement. The level of activity is as light as any time in recent memory which is creating a build up of listings. Values as a consequence are gently slipping for open market transactions while forced sales are showing considerable discounts”.

“Some listings have sat for quite some time and now run the risk of being over exposed. To sell a home it is imperative to have the property in good presentation, realistically priced and to work hard with buyers to reach a solution” Mr. Donovan-Grammer said. “Buyers, or people who are building, are doing so more for their own quality of life and housing, rather than looking to make capital gains. At this stage, any hope that the market will hold largely depends on stable interest rates”

Mr. Donovan-Grammer said. QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates inline with the mix of properties selling in upper or lower price brackets.

The average sales price for Tauranga in July was $410,798.

Wellington

QV’s Residential Price Index for August shows that property values in the Wellington region have continued to decrease, by 2.2% since March this year.

In contrast, values increased by 4.4% in the 7 months to March. Consequently, values now sit 2% above the same time last year, but 5.4% below the market peak of early 2008.

Mr. Kerry Buckeridge of QV Valuations said; “The residential property marketing in Wellington is currently characterised by softening values and relatively modest sales volumes. This is a continuation of the general trend established over the last few months”.

“Many agents continue to find it difficult to get sales across the line, as buyers are thin on the ground and being very cautious. Exceptions appear to be home-handyman bargains at the bottom of the market, as well as very good quality properties at the top of the market” Mr. Buckeridge said.

“At the top end there have been some good sales. These properties are very well located and of good quality. It appears as though buyers in this segment recognise that properties of this quality do not come to market too often. If they want this type of property, they are acting” Mr. Buckeridge said.

“In more buoyant times, activity is often generated by people upgrading to higher quality homes. At present, we get the impression that most people are consolidating and paying down existing debt rather than trading up. In Wellington, this conservative financial stance may be driven by the ongoing cost-cutting and restructuring within the public service sector. Even if there has been no direct effect on individual circumstances, many are playing it safe and battening-down the hatches” Mr. Buckeridge said.

“We are however just starting to see the early stages of the traditional spring market, with an increase in listings coming to market. This phenomenon tends to occur every year as the weather begins to improve and we don’t consider this activity to be the beginning of any sustained recovery” Mr. Buckeridge said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates inline with the mix of properties selling in upper or lower price brackets. The average sales price for the Wellington region in July was $455,144.

Christchurch

QV’s Residential Price Index for August shows property values in Christchurch have begun to ease for the first time since February, after increasing steadily through 2009.

Consequently, values at the end of August sat 3.2% above the same time last year, and 4.7% below the market peak of 2007 as the graph below illustrates: Although there were some early indications of a spring resurgence in Christchurch through August, it remains to be seen what impact the recent major earthquake will have on the residential property market. It will take several months of new data before a trend emerges. QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets.

The average sales price for Christchurch in July was $373,264.

Dunedin

QV’s Residential Price Index for August shows that property values in Dunedin have continued to decrease, by 1.8% since March this year. In contrast, values increased by 3.6% in the 7 months to March. Consequently, values now sit 2.7% above the same time last year, but 5.5% below the market peak of 2008.

Mr. Tim Gibson of QV Valuations said; “The property market in Dunedin shows a continuation of the flat to declining growth that has been evident over the winter period. This trend has been evident in all sub-sectors of Dunedin”. “August has been characterised by fewer listings of residential property and continued low numbers of active buyers in the market. A total of 400 sales were registered within Dunedin city for the month of August, which is a decrease of 13% from the previous month” Mr. Gibson said.

“Well presented dwellings are still moving reasonable quickly, as long as the vendor is realistic and ready to meet current market conditions, and not holding out for values experienced in 2007. The onset of spring has historically seen a period of stronger residential value growth within Dunedin, but this will depend on the number of active buyers in the market substantially improving” Mr. Gibson said.

“Other economic indicators are pointing to a lack of confidence within the property market at present, such as the volume of building consents issued for the month of August. The number issued for August is 9% below the same month in 2009. August 2009 was the time that property values started to experience moderate growth which fuelled the building activity. With the current flat market it is not surprising that building activity has also declined” Mr. Gibson said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for Dunedin in July was $274,485.